1786 creditors received a total of $485 million in payments from Borders, Inc. or its co-debtors (“Borders” or the “Debtors”) in the 90 days before their bankruptcy. For these creditors, the Borders’ July 18, 2011 decision to liquidate means more than a write off of pre-petition unpaid invoices. Many of Borders’ vendors may be asked to repay as “preferential transfers” or “bankruptcy preferences” amounts received from Borders in the 90 days prior to the date of bankruptcy (the “Preference Period”). Section 547 of the Bankruptcy Code provides for such “clawbacks” of transfers found to be “avoidable” and not protected by one or more defenses.FN1

On January 3, 2013, Curtis R. Smith, as the Liquidating Trustee of the BGI Creditors Liquidating Trust in the Borders Group, Inc. Bankruptcy, commenced Chapter 5 preferential transfer recovery litigation in the Southern District of New York (Manhattan).